Earlier this spring, the National Association of Realtors (NAR) settled a commission lawsuit, resulting in changes that have rippled throughout the real estate industry. While none of the changes are monumental, news of real estate commission restructuring has dominated the headlines in recent months. With new rules now set to go into effect this August, we’re breaking down what is (and isn’t) changing so you can be prepared when it comes time to sell your Long Island home or buy your next property.
What Long Island Home Sellers Need to Know
Home sellers in Long Island and across the country have always had the right to negotiate commission with their agent before signing a listing agreement. Similarly, they have always had a choice about whether to offer a commission to the buyer’s agent or not. Despite what you might have seen in the news, there isn’t a huge change happening here. What is changing is whether a buyer’s agent’s commission can be listed in the Multiple Listing Service (MLS). That answer is now no.
What does that mean if you’re thinking of selling your Long Island home this summer? Expect to potentially see the buyer’s agent commission negotiated in as part of the offers on your home. If you need to sell a home to buy another, you will now be signing a buyer’s representation agreement in addition to your listing agreement. The buyer representation agreement was a previously optional document you may or may not have seen before. It is now required as it explicitly outlines an agreed-upon commission between a buyer and their agent.
What Long Island Home Buyers Need to Know
Before you start the search for your next home on Long Island, it’s important to be clear on what the buyer’s representation agreement is and is not. It is not an agreement that is specific to a particular brokerage on Long Island or New York—people around the country will now be required to sign one if they want to use the services of an agent to purchase a property. It does not come with fixed commission. As always, commission between an agent and their client is negotiable.
It is, however, a legally binding document that in most cases will outline an agreed-upon commission amount that you, the buyer, will pay your agent in the event the seller of the home you’re buying is not offering “cooperating commission.” This is essentially the commission amount the seller pays to the agent who brings the buyer—the system we have now. The bottom-line result of the recent NAR ruling is that instead of the seller effectively offering commission to both sides, we may increasingly move to an “each pay their own” commission system.
For more on the commission settlement, check out this article from the National Association of Realtors themselves.
With two months still to go before the new rules are in effect, there may be additional changes to come in terms of implementation. One thing is for sure—if it’s the right time for you to make a move, don’t wait until the dust settles. The real estate industry is always evolving, and we at the Pesce-Lanzillotta Team are well-equipped to tackle any change while ensuring you receive the best representation possible. Please reach out with any questions or to take the next steps to buy or sell on Long Island this summer!
The Pesce & Lanzillotta Team, at BHHS Laffey International Realty
Office: 516-888-9711
Email: info@pl-team.com
